INTRODUCTION: Many traders are surprised with the things they see in the market, while some will ask themselves while the market turned against them, because they believed they had perfected the analysis already, why could then could the market go in such manner since they still lost the order? This losing is possible in many way and for many reasons, and best thing for traders to do is to make sure they are only trading when they have the major breakout in the market, and they can make other analysis count in combination to what they are doing.
I love to do my trading only when there is a major breakout in the market, and by this, i will not be baffled by any uncertain movement in the market, because lots of noises would have been eliminated, and the market would have a clearer direction with a percentage of about 80%, this is good for any trader to take advantage of. Also, i see trading as a professional thing that needs the professional dealings of the trader, this is more than mere trading the indicators of the trend, it is more on the breakout, and the right recognition of the true support and resistance in the market. And this is very simple, in fact, it is one of the most simple studies in the market.
MAJOR BREAKOUT RECOGNIZING TECHNIQUES: Looking at the chart above on GBP/CAD as an example, the horizontal lines are the lines of the major peak/point in the market, and the blue arrow represent its dotting point. The black arrow represent the breakout points on the 200 SMA line, which is represented by its blue (Bullish) and red (Bearish) lines. While the red line recognized the final breakout from the peak itself, and the black circled line denotes the market drama before a major breakout could be established at that point in time.
In this scenario, the traders will consider all those aforementioned points in the market, but will lay more emphasis on the major peak/bottom (as the case may be) and the 200 SMA for breakout confirmation/validation. On this chart, many things happened really, but most of them are only noise of the market, and worth disregarded by the trader. The traders should keep strong analysis on the topmost peak marked by the blue arrows for their major breakout, and wait till the market will break that point to confirm their long term trading. Although, this analysis valid only with a successful breakout of the peak, but the use of the 200SMA will make more sense for the trader. If the both could be successfully broken, then better assurance would be the analysis of the market.
I hope this helps? HAPPY TRADING!